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A10 Networks Delays Filing Its Form 10-K; Class Action Filed

A10 Networks Delays Filing Its Form 10-K; Class Action Filed

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ATEN Class Action Lawsuit Seeks Compensable Damages for Purchasers of ATEN Common Stock Between February 9, 2016 and January 30, 2018, Both Dates Inclusive

Kehoe Law Firm, P.C. continues its securities investigation on behalf of individuals who purchased, or otherwise acquired, the publicly-traded securities of A10 Networks (NYSE: ATEN) between February 9, 2016 and January 30, 2018, both dates inclusive (the “Class Period”).  Recently, a class action lawsuit was filed in United States District Court, Northern District of California, to recover compensable damages caused by the A10 Networks Defendants’ alleged violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.

The class action lawsuit alleges that the A10 Networks “Defendants made false and/or misleading statements and/or failed to disclose that: (1) A10 had issues with its internal controls that required an Audit Committee investigation; (2) A10’s revenues since the fourth quarter of 2015 were false due to improper revenue recognition which prompted an investigation by the Company’s Audit Committee; and (3) as a result, Defendants’ public statements were materially false and misleading at all relevant times.” (Emphasis added)

Investors who bought, or otherwise acquired, ATEN stock during the Class Period have until May 21, 2018 to file a motion with the Court to seek appointment as lead plaintiff.
Prior Announcements by A10 Networks 
Preliminary Q4 2017 Results Announced

On January 16, 2018, A10 Networks announced its preliminary results for Q4 2017 (quarter ended December 31, 2017).  According to the announcement:

A10 Networks expects total revenue in the fourth quarter 2017 to be between $55.5 million and $56.0 million, below its prior guidance of $64.0 million to $67.0 million. The company expects to report GAAP net income in the range of break-even to $0.01 per share. On a non-GAAP basis, the company expects to report net income between $0.05 and $0.06 per share, using approximately 74.6 million diluted shares, which is within the previous guidance for non-GAAP net income of $0.01 to $0.07 per share, using approximately 74.0 million shares on a diluted basis. GAAP and non-GAAP net income results include a benefit from performance-based variable compensation. A preliminary reconciliation between GAAP and non-GAAP information is contained in the financial statements below.

‘We are disappointed with our revenue results for the quarter, which were below our guidance primarily due to a shortfall in North America sales as we experienced lower than expected seasonal demand trends in the region. Despite this shortfall, we increased our cash and cash equivalents by $6.6 million, and continued to see strength for our security solutions,’ said Lee Chen, president and chief executive officer of A10 Networks. ‘Over the past two quarters, we have implemented a number of changes across the organization to help improve our execution and expand our presence in security to drive growth. We are making progress on these initiatives and continuing to work to align our sales and enablement engine with the growth opportunities in our market. As part of these initiatives, we have brought in Chris White to lead our global sales team, effective January 2, 2018. Chris is an accomplished sales executive with a long career in the cybersecurity industry, and his expertise in sales and channel leadership will be a solid asset to A10.’

(Emphasis added)

On this news, ATEN shares fell $0.99 per share, or more than 13% from its previous closing price, to close at $6.32 per share on January 17, 2018.

Postponement of Q4 2017 and Full Year Earnings Release and Conference Call

On January 30, 2018, A10 Networks announced that it was going to postpone the announcement and conference call related to its Q4 2017 and full year earnings.  According to the announcement:

In the fourth quarter of 2017, the Company determined that a mid-level employee within its finance department had violated the Company’s Insider Trading Policy and Code of Conduct. As a result, the Company, with the assistance of outside counsel, conducted an email review and additional procedures to ensure the accuracy of its reporting of financial information for 2017. Such review and procedures did not identify matters that required material adjustments to be made. Nonetheless, the Company’s Audit Committee determined that further review and procedures relating to certain accounting and internal control matters should be undertaken. The Audit Committee’s investigation, which is being conducted with the assistance of outside counsel, is principally focused on certain revenue recognition matters from the fourth quarter of 2015 through the fourth quarter of 2017 inclusive.

The investigation is in its early stages. The Company is not able to provide a date as to when it will be completed, nor provide any assurance that the Company will not determine that material adjustments to its past financial statements are appropriate.

At the conclusion of the Audit Committee’s investigation, the Company will announce the scheduling of a conference call to discuss full financial results for the 2017 fourth quarter and full year.

(Emphasis added)

On this news, ATEN shares dropped $0.86 per share, or over 12% from its previous closing price, to close at $6.13 per share on January 31, 2018.

Delayed Filing of Annual Report on Form 10-K

On March 16, 2018, A10 Networks announced that it was going to delay the filing of its Annual Report on Form 10-K for the year ended December 31, 2017.  According to the announcement:

As previously disclosed, the company’s Audit Committee, with the assistance of outside counsel, is conducting an investigation regarding certain revenue recognition and internal control matters. The investigation is focused on the time period of the fourth quarter of 2015 through the fourth quarter of 2017 inclusive. The Audit Committee has not reached any conclusions because the investigation is ongoing. Consequently, the company is not in a position to file the Form 10-K until after the completion of the Audit Committee’s investigation. While the company continues to work expeditiously to conclude this review and to file the Form 10-K as soon as practical, it does not anticipate filing its Form 10-K within the 15-day extension period provided under Rule 12b-25(b). (Emphasis added)

A10 Networks Investors and Shareholders

If you purchased, or otherwise acquired, the common stock of A10 Networks during the Class Period February 9, 2016 and January 30, 2018, both dates inclusive, and have questions or concerns about the securities investigation or your potential legal rights, please contact John A. Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].

Investors who bought ATEN during the class period and suffered damages have until May 21, 2018 to file a motion with the Court to seek appointment as lead plaintiff. Please note that no class has been certified in the above action, and until a class is certified, you are not represented by counsel unless you retain an attorney of your choice. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may serve together as “lead plaintiff.” Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff.

Kehoe Law Firm, P.C.